Mets owners sued for Madoff losses

Updated: July 30, 2010, 9:33 PM ET
By Adam Rubin | ESPNNewYork.com

NEW YORK -- New York Mets principal owner Fred Wilpon may face a second wave of losses as the result of Bernard Madoff's Ponzi scheme.

The widow of a former employee of Wilpon's Sterling Equities Associates filed a lawsuit in U.S. District Court in Manhattan on Friday charging that Sterling Equities, which owns the Mets, and several of its top executives bear responsibility for letting employees put more than $16 million in 401(k) assets into accounts controlled by the jailed financier Madoff.

The lawsuit, which seeks class-action status, contends that $16.2 million of the 401(k)'s $17.6 million in assets were invested with Madoff, and alleges that Wilpon has fiduciary responsibility for that decision on the grounds that Sterling Equities and several of its top executives should have known that Madoff was carrying out a massive Ponzi scheme that cost thousands of investors billions of dollars. Madoff, 72, revealed the fraud in December 2008, pleaded guilty to fraud charges and is serving a 150-year prison sentence.

The lawsuit said its plaintiff, Elyse S. Goldweber, was the beneficiary of the 401(k) plan built by her late husband, David A. Sloss. It said the majority of $280,420 in her husband's retirement plan was directly invested with Madoff "and has now been wiped out."

A statement sent March 31 said that she should not rely on the stated balance in the retirement account "in light of the reported theft by Madoff," the lawsuit said. The actual account balance cannot be determined, the lawsuit quoted the statement as saying.

The lawsuit particularly took aim at statements by Wilpon that he and his business were not seriously harmed by the Madoff scandal.

"While defendant Wilpon has been quoted as claiming that he and his business family are 'fine,' his loyal employees (many of whom had previously been laid off) have lost their retirement savings," the lawsuit said. It added that an insurance policy does not come close to covering the losses.

"As a result of their massive exposure to Madoff, plaintiff and other class members have lost the majority of their retirement savings," the lawsuit said. It did not say how many employees or former employees were affected.

Sterling Equities issued a statement suggesting the suit has "no merit." "The Sterling Equities 401(k) Plan and its participants were among the many victims of the Madoff fraud," the statement read. "The Sterling Equities Plan filed a claim with [the Securities Investor Protection Corporation] for losses sustained by the Plan and assisted each participant in the filing of an individual claim related to their 401(k) investment in Madoff as suggested by the SIPC trustee. We believe the participants who were defrauded by Madoff are entitled to the full protection of SIPC and are therefore eligible to be reimbursed for all their losses as is provided under the law."

Investigators who are still trying to identify and collect Madoff assets for investors say the financier lost nearly all of the $20 billion invested with him even though he claimed in statements mailed to 4,800 account holders in 2008 that their investments were worth $68 billion.

The court-appointed trustee who is recovering Madoff money for investors has said the Mets profited by nearly $48 million from their roughly $523 million in investments with Madoff.

Adam Rubin covers the Mets for ESPNNewYork.com. You can follow him on Twitter. Information from The Associated Press was used in this report.

Adam Rubin has covered the Mets since 2003. He's a graduate of Mepham High School on Long Island and the Wharton School of the University of Pennsylvania. He joined ESPNNewYork after spending 10 years at the New York Daily News.
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